Nonalcoholic fatty liver disease (NAFLD) is the most common liver disease in the United States and has no proven therapy. Critical to the development of an effective treatment for this disease is an understanding of how a benign fatty liver progresses to hepatocellular injury and inflammation or steatohepatitis that leads to chronic liver disease. The objective of this proposal is to delineate mechanisms by which the lysosomal degradative pathway of autophagy plays a central role in preventing the development of steatohepatitis. Our previous investigations identified a novel function for autophagy in the regulation of cellular lipid metabolism and steatosis. Autophagy mediates the lipolytic breakdown of stored lipids into free fatty acids (FFAs) and maintains levels of mitochondrial -oxidation, suggesting a central role for autophagy in cellular pathways regulated by lipid metabolism. Preliminary findings demonstrate that autophagy mediates hepatocyte resistance to toxicity from saturated FFAs. In addition we have identified a function for autophagy in down regulating the proinflammatory activation and polarization of macrophages by inflammatory mediators including FFAs. These findings indicate that autophagy functions to regulate both cellular death pathways and innate immunity in response to elevated FFAs which are central to the pathogenesis of NAFLD. Based on these and other preliminary studies, our central hypothesis is that the effects of autophagy on hepatocyte and macrophage lipid metabolism are critical to prevent the development of liver injury and inflammation in hepatic steatosis. We will test this hypothesis by delineating the mechanisms by which autophagy-mediated effects on lipid breakdown regulate hepatocyte injury and death and macrophage activation in studies contained in three Specific Aims. First, we will test the hypothesis that autophagy prevents hepatocyte organelle damage and cell death by promoting the metabolism of saturated FFAs. Second, we will test the hypothesis that autophagy down regulates the innate immune response through effects on lipid metabolism that block proinflammatory macrophage activation and polarization. Third, we will test the hypothesis that decreased autophagy in hepatocytes and macrophages in vivo promotes the development of liver injury and inflammation in the setting of hepatic steatosis. The objective of these studies is to delineate novel paradigms by which the effects of autophagy on lipid metabolism function to block hepatocyte death and development of a proinflammatory state. The findings will indicate that defects in autophagy that occur with obesity and aging may contribute to the development of steatohepatitis. The ultimate goal of these investigations is to better understand the basic cellular mechanisms underlying the development of steatohepatitis in order to design new strategies to prevent and treat human NAFLD.